Investors have warned that an Andy Burnham-led Labour government would spark a sell-off in gilts and the pound if it launched a borrowing spree against a backdrop of fragile markets.Burnham, Labour mayor of Greater Manchester, said that the UK should not be “in hock” to bond markets, as he burnished his leftwing credentials in what is widely seen as a challenge to Prime Minister Sir Keir Starmer.But fund managers said Burnham’s proposal to borrow an extra £40bn to build council houses, alongside a mass nationalisation scheme, would alarm a gilt market already under pressure from the scale of government borrowing.Mark Dowding, chief investment officer for fixed income at RBC BlueBay Asset Management, said: “I think this speaks to his own financial naivety. Market confidence would sour very quickly. Yields would rise and the pound would also likely be under pressure.”Starmer responded yesterday by comparing Burnham’s economic policies to those of former Tory prime minister Liz Truss, whose economic plans also spooked the bond markets.
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